Find answers to common questions about revenue variance analysis, including formulas, calculation methods, and practical guidance for financial professionals.
To do a variance analysis, compare actual results with a benchmark such as budget, forecast, or prior period. Then break down the differences into key drivers like volume, price, mix, and other factors. This helps explain not only how much performance deviated, but why it changed.
Revenue variance analysis is the process of comparing actual revenue to expected revenue (budget, forecast, or prior period) and breaking down the difference into drivers such as sales volume, product mix, pricing. It helps organizations understand not just how much revenue changed, but why.
Revenue variance analysis is calculated by comparing actual revenue with a benchmark such as budget, forecast, or prior period, and then breaking down the difference into drivers like sales volume, product mix, pricing, and discounts. For detailed formulas and examples, see here →
Revenue variance is identified by comparing actual revenue with a benchmark such as budget, forecast, or prior period, and then analyzing the difference across drivers like sales volume, product mix, pricing, and discounts. For a step-by-step calculation and interactive tool, visit the page →
The total volume variance formula measures the impact of changes in overall sales volume on revenue. It is calculated as: (TotalVolume_actual - TotalVolume_base) × Mix_base × Price_base × (1 - Discount_base). Formulas for other factors such as product mix, price, and discount variances can be found here →
The mix variance formula measures the impact of changes in product assortment (sales mix) on revenue. It is calculated as: TotalVolume_actual × (Mix_actual - Mix_base) × Price_base × (1 - Discount_base). Formulas for other factors such as total volume, price, and discount variances can be found here →
The discount variance formula measures the impact of changes in discount rates on revenue. It is calculated as: TotalVolume_actual × Mix_actual × Price_base × (1 - Discount_actual + Discount_base). Formulas for other factors such as total volume, product mix, and price variances can be found here →
The price variance formula measures the impact of changes in selling price on revenue. It is calculated as: TotalVolume_actual × Mix_actual × (Price_actual - Price_base) × (1 - Discount_actual). Formulas for other factors such as total volume, product mix, and discount variances can be found here →
The new product variance formula is a conditional factor used to capture the impact of newly introduced items on revenue. It is calculated as: if Volume_base = 0 and Volume_actual ≠ 0 then NewProduct_Factor = NetSales_actual. This ensures that revenue generated by products absent in the base period but present in the actual period is correctly attributed as a separate driver. For calculation of the factor with an interactive tool, visit here →
The delisted product variance formula is a conditional factor used to capture the impact of discontinued items on revenue. It is calculated as: if Volume_base ≠ 0 and Volume_actual = 0 then DelistedProduct_Factor = -NetSales_base (negative NetSales_base). This ensures that revenue lost from products present in the base period but absent in the actual period is correctly attributed as a separate driver. For calculation of the factor with an interactive tool, visit here →
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